Starbucks’ new iPhone app could fatten baristas’ wallets

Starbucks has unveiled a new iPhone app that will allow customers to tip from their smartphone, a move that flexes the coffee giant’s digital muscle and could help line baristas’ pockets with money from the millions who use mobile devices to pay for their lattes.

Right now all tipping at Starbucks is done in cash. Customers paying with a credit or debit card or with the Starbucks card cannot leave tips unless they have cash in hand.

The new feature connects Starbucks employees with a rapidly expanding universe of potential tippers: 10 million customers use the Starbucks mobile app, accounting for 12 percent of transactions, double the rate from a year ago.

“We think it’s going to be great for our baristas,” Chief Digital Officer Adam Brotman said in an interview at Starbucks’ Sodo headquarters. He said customers have been requesting a tipping feature for the app for some time.

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The addition of tipping comes amid a thorough redesign of Starbucks’ iPhone app, an increasingly important tool for the company as it focuses on adapting to consumers’ embrace of smartphones and online commerce.

Starbucks processes 5 million mobile payments per week. At an analyst conference Tuesday, chief operating officer Troy Alstead said that Starbucks is the largest mobile-payments retailer in the U.S. “and, we think, around the world.”

Alstead and other executives have hinted that the company might eventually extend that expertise beyond its stores.

Also key is Starbucks’ 7 million member-strong rewards program, which is highlighted in a streamlined app redesign that gives customers a quick glimpse of how close they are to freebies.

Starbucks has also added a “shake to pay” feature: to pay, customers shake their phone at the counter. That causes a bar code to show up and the barista scans it.

Currently customers navigate their way to the bar code by pressing a button.

Starbucks Chief Financial Officer Scott Maw said at the analyst conference on Tuesday that the current version of the app is the fastest way to pay. The shake-up feature should help speed transactions further.

The app will be available on March 19 in the U.S., U.K. and Canada, and an Android version will be available later this year, the company said.

Starbucks’ tipping feature will give customers the option of tipping 50 cents, $1 or $2 via a push notification sent to their iPhone a few minutes after paying at the register.

Customers will have a two-hour window to decide about the tip, or to change the amount, said Brotman.

The feature also somewhat resembles the tipping method devised by Square, a mobile-payments company in which Starbucks has invested and which Brotman called “an inspiration.”

Tips have been a touchy subject at Starbucks. Last November a U.S. Court of Appeals dismissed a lawsuit filed by Starbucks baristas in New York upset at having to share tips with shift supervisors.

Starbucks’ old iOS app came under fire in January when a cybersecurity expert found that it stored some user information without encryption. The app was fixed a few days after the discovery.